This article talks about the ten categories of Oahu real estate. Deciding which one to invest in is ultimately your decision and is based on what it is that you need. To aid you with this, here are some benefits and disadvantages about each particular category.
The first category in real estate investing is being a fixer-upper. The advantage to this is that you get a fat investment return and you get to exercise your creativity. But this is an unpredictable field so there are risks that you need to think about. You also get some heavy gains taxes.
The second category is renting a single family home. The good thing about this is that it is easy to start investing in and there is a good return on investment for the long term. However, it is quite tough to be a landlord and you it takes a longer time for you to receive a substantial pay-off. You also stand to lose earnings when the house is not being rented.
You can also sell a rent-to-own home. The benefit is that if you purchase the home and sell it as rent-to-own, you can charge higher rent and the buyer maintains the home himself. The bad thing is that it can be tricky in terms of bookkeeping and there are a lot of tenants who do not push through with the purchase.
Fourthly, you may invest in low-income housing. The advantage to this is the same as the first category except that you get a more substantial cash flow. The negatives are also the same as the first one but you need to be ready to do more repairs and deal with more tenant problems.
You can invest in a boarding house that will generate more money for you since you are renting out the rooms. This is profitable especially if you have it in a college area. But be ready for a lot of headaches.
The sixth category is land that you split and resell. This is easier than the other categories and you also get bigger profits. But this can take a while and you need to shell out some money without earning any as you are waiting.
You can invest in commercial properties, which is the fifth category. Benefits include high returns and triple-net leases for multiple years that mean less management work for you. The bad thing about this is that the market is hard to get into and you end up losing income if your storefronts remain vacant for a long time.
The eighth category is to buy a house, live in it, and sell it. You can take advantage of a tax law which allows you to fix the house and sell it tax-free after living in it for two years. You can also keep on doing this process. The negative point is the possible attachment to the property and the possibility of having to move around a lot.
The ninth category is investing in cash and selling with terms. The benefit is that you get to get a good rate if you pay in cash and you get a good rate if you sell in terms. You can also charge a higher interest rate. The disadvantage is that you have to have substantial cash and you need to be ready to have this tied up for a while.
The final category is pure speculation. The benefit is that you get to make a lot of profit for a low-management deal. But it is hard to predict the growth of the property’s value.